Archive forJuly, 2014

Today, a survey conducted by research firm GfK NOP, on behalf of the European Commission, revealed the gauge of consumer confidence in the UK slid to -2.0 in July from a 10-year high of 1.0 in June, marking the first decline in six months. The reading missed the economist forecast of an improvement to 2.0. All five components of the index declined in July.

The International Monetary Fund (IMF) stated that the global growth in the coming five years is expected to reduce 2% due to slow progress in the emerging markets and higher interest rates across geographies. Furthermore, the ongoing conflict between Russia and Ukraine is likely to further impact markets.

The index of pending home sales in the US fell 1.1% m-o-m to 102.7 points in June, after climbing 6% m-o-m in May, in contrast with the market expectation of a 0.5% increase, the National Association of Realtors reported. This decline is ascribed to inadequate credit facility and slow wage growth.

Today, a survey by Halifax showed people in the UK have become more cautious about purchasing a house. In Q2 2014, the balance of people considering it a good time to buy a home slipped by 29 percentage points to 5%, the sharpest drop since the survey began in April 2011. The balance of people considering it a good time to sell rose by one point to 25%. For 2015, 57% people consider it is a good time to sell, while 32% believe it would be unfavourable.

Growth in UK house prices eased to 0.1% m-o-m in July from 0.3% in June, the lowest in the last one year, revealed by the results of a survey by Hometrack. Anticipated rise in interest rates and stricter mortgage rules are likely to extend the trend.

The International Monetary Fund (IMF), on Wednesday, cut the US 2014 growth forecast to 1.7% from 2% earlier. The 2.9% contraction in Q1 2014 is likely to be offset by acceleration in growth to 3–3.5% in the second half of 2014.

The National Bank of Hungary lowered its policy rate to 2.1% from 2.3%, the 24th consecutive rate cut since August 2012. Governor Gyorgy Matolcsy said the central bank plans to hold the benchmark rate at 2.1% until the end of 2015, unless the 3% inflation target is jeopardised.

For the fiscal year ending March 2015, the Japanese government has slashed its gross domestic product (GDP) growth forecast to 1.2% from its prior estimate of 1.4%. The downward movement was majorly due to slack in exports and sluggish domestic demand after hike in sales tax. However, growth is expected to improve to 1.4% in the coming year.

In the UK, asking prices for homes fell 0.8% m-o-m in July, following a 0.1% increase in June, property tracking website Rightmove revealed. Stringent mortgage lending norms and an anticipated increase in interest rates appeared to be the main reasons for the downward price movement; however, it could pace up by year end, Rightmove stated. Price growth slowed to 6.5% y-o-y in July from 7.7% in June.

Investors are currently confronted by a smorgasbord of competing reasons to be cautious about the future trend of markets while arguments continue about which basis of equity valuation justifies present index levels.

As per data released by Knight Frank and Markit, the gauge of house price sentiment in the UK inched down to 62.4 in July from 62.5 in June. Sub-indices for all regions remained above 50, exhibiting price gains during the month. Meanwhile, the index measuring expectations of future prices improved to 71.7 in July from 71.6 in June.

The Federal Reserve’s Beige Book revealed the US economy improved at a modest to moderate pace in June, with all 12 Fed districts reporting growth, led by increased manufacturing activity and continuing demand for labour.

The National Bureau of Statistics reported that China’s gross domestic product (GDP) jumped 7.5% y-o-y in Q2 2014 after advancing 7.4% in the previous quarter, boosted by credit-easing and conservative spending. Economists had expected 7.4% growth for the quarter.

Standard & Poor (S&P) maintained Germany’s sovereign rating at ‘AAA’, with a stable outlook, citing the strength and high level of diversification in the economy. Meanwhile, the agency kept Ukraine’s long-term foreign currency rating unchanged at ‘CCC’, but raised the outlook to stable from negative.

Yesterday, data from the Commerce Department revealed that wholesale inventories in the US grew 0.5% m-o-m in May after a revised increase of 1% in April. Markets had expected inventories to rise 0.6% during the month. Durable goods inventories advanced 1%, while non-durable goods inventories lowered 0.3%. Furthermore, the department reported that wholesale sales increased 0.7% in May after climbing 1.3% in the preceding month.

The Royal Institution of Chartered Surveyors (RICS) reported that the monthly house price balance in the UK dropped to 53% in June from a downwardly revised 56% in May, faring worse than the expected reading of 55%. Tougher mortgage market review rules since April and concerns over an increase in interest rates dragged the index lower.

Today, data from the British Retail Consortium (BRC) revealed that the UK shop price index was down 1.8% y-o-y in June, recording the 14th consecutive monthly drop. The negative price movement is largely ascribed to a stronger pound and escalating price-based competition among supermarkets. Food prices rose 0.6%, while prices of non-food items fell 3.4%, both recording the weakest reading since the index began in 2006.

Today, a quarterly survey conducted by the British Chambers of Commerce (BCC) maintained the growth forecast for the UK at 0.8% for Q2 2014 and 3.1% for 2014. However, exports and business investment declined during the quarter. The agency warned a slowdown in business growth increased the risk of a downgrade in these estimates.

Yesterday, while speaking at the Cercle des Economistes Conference in France, the International Monetary Fund (IMF)’s Managing Director, Christine Lagarde, said the pace of growth in the world economy could be slower than earlier expected, owing to a weak investment scenario and persistent downside risks to the US economy.

A survey by JP Morgan and Markit revealed the global all-industry output index rose to 55.4 in June, the highest since February 2011, from 54.2 in May. The reading remained in the expansion territory (>50) for the 21st successive month. The sub-index of new orders expanded to 56.0 from 54.3, majorly driving an improvement in the main index.

In her speech at the International Monetary Fund, Fed Chair Janet Yellen stated the central bank should primarily focus on price stability and employment, rather than financial stability. She maintained that excesses in the financial sector should largely be dealt through regulatory policies.

Data from Autodata Corp revealed auto sales in the US rose 1.2% to a seasonally adjusted annualised rate of 16.98 million in June, the highest since July 2006. Markets were expecting sales to decline 3%.

A survey by the China Federation Of Logistics & Purchasing and the National Bureau of Statistics revealed the manufacturing purchasing managers’ index (PMI) rose to its six-month high of 51 in June from 50.8 in May, matching market estimates. Moreover, the final manufacturing PMI released by Markit Economics and HSBC Bank rose to 50.7 in June from 49.4 in May, below the flash estimate of 50.8.